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Doctors Receiving Kickbacks May Be Persuaded to Prescribe

August 21, 2013

The blog aboutlawsuits.com recently published a blog post by Irvin Jackson about a new study that deals with doctors receiving “kickbacks” from pharmaceutical companies or drug representatives for prescribing a given medication. Scholars at the Rady School of Management at University of California, San Diego found that “more than half of the 330,000 physicians in their study received payment of some kind for prescribing specific drugs.” Quite predictably, when a doctor receives gifts or money from a company or a representative of a company, s/he is more likely to prescribe a drug manufactured by that company, even when compared to very similar drugs or its generic counterpart.

The study continues, “This payment-for-prescription effect scales with transfer size, although doctors receiving only small and/or infrequent payments are also affected. Although the pattern holds in nearly every U.S. state, it is strongly and positively related to regional measures of corruption.”

These researchers report that from 2009 to 2011, payments from pharmaceutical companies to doctors rose from $188.86 million to $773.05 million, though this dramatic increase is also related to additional figures being made public and is not solely due to payments skyrocketing. Researchers also explain that drug companies pay doctors upwards of $10,000 to conduct research, while “[r]eported consulting, speaking, and travel payments were also large, with many payments in those categories in the thousands.” The median amount spent on gifts for doctors was $72, while meals, which made up more than 75 percent of these payments, had a median value around $37.

Jackson reports, “The average doctor in the study generated about 2,980 prescriptions from 217 patients. However, doctors who got payments from pharmaceutical companies gave out 3,566 prescriptions [from] 243 patients. These same doctors were more likely to prescribe a brand name drug than a generic version.”

This blog published a post in February of 2012 on a related note (called “Fraud in Hospital Adds to Increased Cost in Healthcare Affecting Medical Malpractice Issues”), about a California doctor whose hospital billed $533 million over ten years for spinal-fusion surgeries while distributing up to $20,000 to local chiropractors for referring their patients to him to perform these procedures. They also marked up metal spinal implants from $3,600 to $42,000–a nearly 1,200 percent increase.

What goes unexplained in this post is that these kickback schemes are fraudulent and that they are potentially responsible, at least in part, for increasing healthcare costs in this country. It is well known that brand-name medications cost significantly more than their generic counterparts, so this financially motivated prescription preference not only helps line doctors’ pockets, but also forces patients to pay more than they may otherwise have to.

One relatively bright spot is the Physician Payments Sunshine Act kicking in next year. This piece of legislation will force companies manufacturing medication and medical devices to make all payments to doctors and teaching hospitals publicly available. But, since many of these figures are already available for public perusal, it remains to be seen whether this additional measure of transparency will actually do anything to alter behavior and curb kickbacks.

Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP attorneys are licensed in Pennsylvania, New Jersey, New York, North Carolina, Florida, Louisiana, Missouri, and Texas. In addition, our attorneys practice in other states on a pro hac vice basis. Pro hac vice admission is when a lawyer not licensed in a particular state associates with a lawyer who is licensed in that state and obtains the court’s permission to jointly represent a client in a specific matter.

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